The emergence of China as an economic powerhouse and gradual shift of power from West to East provide Zimbabwe’s inclusive government with a unique opportunity to hasten economic recovery. Strengthening Sino-Zimbabwe economic relations will enable Zimbabwe to use China as a counterweight to the traditional Anglo-American dominated stranglehold on the economy.
Appreciation of the Sino-American geopolitical power struggle for influence over Zimbabwe’s resources, as well as the strategic importance of Sino-Zimbabwe economic relations is needed in order to identify key areas which the government can build upon this relationship to accelerate economic recovery.
Geopolitics of Zimbabwe’s Natural Resources
Governments the world over appear to have two foreign policies: one sold to the public and one executed, no matter how devastating the latter may be in terms of blood and treasure.With respect to Zimbabwe, the public foreign policy of the US indicates a genuine concern for human rights, the rule of law and good governance. However, its executed foreign policy suggests that its concerns are rooted in Harare’s drive for indigenous control over economic levers; rejection of IMF and World Bank counter-developmental prescriptions; willingness to expend blood and treasure in a fellow African country to restore its peace and sovereignty; but above all, the concerns are rooted in Harare’s mineral wealth and its economic pivot eastward, towards The Peoples’ Republic of China.
Zimbabwe, like oil rich Sudan, is at the frontline of an undeclared Cold War over its strategic minerals, which include vast yet to be exploited coal-bed methane gas; the second largest platinum deposits in the world estimated at over $500 billion; huge coal reserves and immense hydroelectric power potential; as well as the geological treasure zone in the Great Dyke region, home to vast deposits of chromium, nickel, copper and gold to mention but a few.
China’s voracious appetite for these mineral resources has resulted in its disbursement to Zimbabwe of soft loans for economic development and no-strings-attached credit, which have left Washington’s usual ploy of IMF and World bank ‘reforms’ high and dry. Zimbabwe’s government has used these loans and credits to invest in infrastructure including schools, clinics and transport routes in direct contrast to typical IMF and World Bank reforms which require a cut in spending on the aforementioned infrastructure. Why agree to voluntary lower your citizenry’s living standards on the back of exorbitant loans when you can receive virtually interest free loans aimed at investing in development and peoples living standards?
Beijing’s refusal to conform to the norms of imperialist African relations and its disregard for approval from the Bretton Woods institutions prior to dealing with Harare has left Washington smarting and with no choice other than to employ another economic weapon in its arsenal, that of ‘targeted’ sanctions.
However vociferously China may denounce these sanctions in public or private and oppose them at the UN Security Council, the fact of the matter is that a withdrawal of western corporate tentacles from Zimbabwe has only played into their hands. This US retreat has paved way for China’s advance into its fifth largest trading partner in Africa that is strategically nestled between its two biggest African trading partners, namely, Angola and South Africa.Crucially for China, Zimbabwe also neighbors its flagship infrastructure project on the continent, a transcontinental railroad designed to link Tanzania’s port to oil rich Angola and copper filled Zambia.
Controlling China’s economic emergence that has seen Sino-African trade balloon from $10 billion in 2000 to over $100 billion, has been an undeclared priority of US foreign policy. Emphasis has shifted from US development aid, which has been cut sharply for Sub-Saharan Africa, towards military aid and establishment of Africa Command, a military command with the rather ominous mandate to ‘professionalize the continent’s militaries to make them more effective.’
This Sino-American geopolitical power struggle has visibly played itself out at the UN Security Council where a US diplomat said of US-sponsored sanctions which included an arms embargo on Harare, that the US knew “… it would lose [the vote, but] it decided to proceed with the vote anyway, to force the Russians and eventually the Chinese to publicly take a stand in support of Mr. Mugabe.”
As the stage-managed political theater was met with phony moral ‘outrage’ aimed at Chinese ‘appeasement,’ Beijing and Harare were busy consummating an arms deal which had been months in the making, and those directing scenes in New York no doubt had a hand in dramatic scenes at The Port of Durban.
Despite such rare overt glimpses of the intractable power struggle in New York, the Big Apple is also home to a more subtle power relationship involving the increased issuing of US Treasury Securities, which form the bulk of China’s $1.7 trillion foreign currency reserves. The increased indebtedness of the US and the dollar panic Chinese authorities could easily bring about for political reasons, has signified a substantial shift of economic power from west to east.
Thus, despite the irony of China essentially helping to fund American activities abroad that are contra her national interests (such as the hundreds of millions the US spends annually on Tibet) this funding means that unlike the last Cold War, China is engaging with vastly more assets, and the US is engaging at a time when its hard and soft power is depleted, as evidenced by its overstretched military and overextended banks.
This simultaneous dissolution of Anglo-American hegemony and substantial increase in China’s relative economic power provides the inclusive government a great opportunity to engage in real politic of its own. It allows Zimbabwe to use China as a political and economic counterweight to the one-sided Anglo-American domination of her economy. This can be done by strengthening the Look East policy and Sino-Zimbabwe relations in particular, whilst seeking to restore previously burnt bridges that lead westward.
Strategic Importance of Sino-Zimbabwe Relations
Much emphasis has been put on the need to re-engage Bretton Woods institutions and détente with the West, and rightly so, but this approach must occur in simultaneity with a strengthening of economic ties with China, which has become of great geo-strategic importance to Zimbabwe on various fronts.
Firstly, China has replaced western countries as the investor with the fastest foreign direct investment growth in Zimbabwe, and the foreign direct investment which Zimbabwe is so desperately in need of is more likely to come from an economy that is continuing to grow at a rapid pace, than from those which are seeking assistance from it. Similarly, the scope for increased export opportunities offered by the ever-expanding Chinese economy and the fact that China is the single most important importer of Zimbabwean tobacco is of great importance.
Secondly, Beijing’s propensity to give interest-free loans and grants to Zimbabwe for different infrastructure development projects is of increasing importance as western donors continue to ‘wait and see’ and the infrastructure portion of the budget is slashed. These Chinese loans and grants amounted to more than $8 billion to Nigeria, Angola and Mozambique, compared to the $2.3 billion by the World Bank to the entire Sub-Saharan African region last year. Therefore, as important as IMF and World Bank approval is as an indicator for investors and countries alike, the deepest pockets are found in the East.
Thirdly, economic sanctions on Zimbabwe have resulted in increased reliance on China for imports of telecommunications, road-building, irrigation and farming equipment and many other critical items it can no longer import from the West, which in turn has resulted in over 40 Chinese companies operating in Zimbabwe.
Finally, Chinese authorities’ association with Zimbabwe’s liberation struggle and subsequent cordial political relations have resulted in a crucial formation of an ideological alliance with a permanent member of the UN Security Council. These cordial political relations are behind China’s latest policy initiative, which will “establish and develop a new type of strategic partnership with Zimbabwe, featuring political equality and mutual trust, economic win-win cooperation and cultural exchange.” This creates an opportune time for the government to strengthen Sino-Zimbabwean relations across key sectors whilst relations with the West begin to thaw.
Strengthening Sino-Zimbabwe Economic Relations
Sectors in which Sino-Zimbabwe co-operation can be strengthened include agriculture, mining, tourism and energy. With respect to agriculture, China’s Premier said of the land democratization process that “China respects and supports efforts by Zimbabwe to bring about social justice through land reform.” The support China has provided has been primarily in the form of the supply of low-cost agricultural equipment. This supply can be increased to allow lower-cost entry into the international market, particularly for those newly resettled farmers who will certainly be looking to expand operations and revert back to extensive farming from the intensive farming currently favoured by government. China’s high demand for Zimbabwean tobacco should also result in priority being given to tobacco contract growing projects.
The tourism sector is another important sector for Sino-Zimbabwe relations and Chinese visitors to Zimbabwe now constitute the third most important national contingent and form almost 10% of total visitors.
Zimbabwe’s efforts to revive the ailing tourism industry had been given a big boost by China’s conferral of Approved Destination status on the nation, which provides great business opportunities for airlines, hotels and other tourist operators. This status, coupled with the over 50,000 annual Chinese visitors to South Africa creates a wide scope for expansion in light of the possibility of package deals.
Efficient transport routes and reliable energy supplies have been identified as two key areas that must be revived for tourism to flourish and Zimbabwe can wean itself off its dependence on imports for 40 % of its domestic consumption of electricity, at a monthly cost of $45 million, by continuing to take advantage of low cost solar energy equipment from China, in line with recent policy pronouncements under the STERP.
Zimbabwe has also sought to reduce its dependence on electricity imports by encouraging Chinese and Zimbabwean energy companies to form partnerships and recently China’s National Aero-Technology Import and Export Corporation (CATIC) and China North Industries Corporation (NORINCO) have agreed to finance multi-billion dollar expansion projects by ZESA and Hwange Colliery Company, respectively.
Concerning the mining sector, which has also been affected by fly-by-night electricity supplies, China’s insatiable desire for raw materials is underscored by the signing of several cooperation and trade agreements centered primarily on iron, steel, chrome and platinum. As the reliability of energy and transport routes is improved these deals will be fully consummated and begin to bear fruit.
The recent increase in lines of credit at Chinese banks, for mining companies and small and medium sized enterprises (SMEs) across industries that include textile, tile, soap and fiberglass manufacturers as well as the substantial quantities of low cost textiles and clothing from China sold at retail prices well below the prices of local substitutes, should help to dampen inflation in the short term, without too greatly compromising the viability of local industries over the long-term.
Thus, regardless of previous international alliances and rivalries which various parties to the government may have had, it is time for the government to engage in serious real politic of its own, and hasten economic recovery by simultaneously strengthening Sino-Zimbabwe economic relations and working on rapprochement with the west, whilst strategically realigning the economy, from a vastly Anglo-American orientated one to a more geo-strategically balanced economy, allowing Zimbabwe a greater say in how its resources are used and ultimately her destiny.
By Garikai Chengu
Mr. Chengu is an African and African American Research Institute Fellow, Harvard University. The views expressed herein are those of Mr. Chengu and do not necessary express those of the institute.